Sleepy Beirut Stock Exchange.
The local bourse remained in its now customary dormant state, as weekly turnover fell 33 percent to 72,146. Price movements were limited to two stocks, namely Solidere “B” and BEMO “C”, both dropping on Friday and causing the BLOM Stock Index to shed 0.5 percent to 589.14. An equity revival doesn’t seem any closer as reports on the economy by both S&P and the Economist Intelligence Unit (EIU) warned of the deteriorating economic conditions. S&P, which already has Lebanon on a Credit Watch, named it as one of 15 countries with a banking system experiencing or vulnerable to stress and to a “credit bust” in the form of sharp increases in defaults on loan repayments. This report has revived investors’ fears of the possibility of a downgrading from the rating agency before the end of the year. In parallel, the 3rd quarter country report by the EIU cited political obstacles and ailing public finances as continuous factors holding back economic recovery in Lebanon over the next 18 months. The report highlighted delays in implementing a government plan to raise $5billion from the sale of state-owned assets as part of a plan to reduce the deficit.
These negative reports on the state of the national economy coupled with the upcoming parliamentary elections and the change in government expected in October, providing additional reasons for investors to remain on the sidelines vis-à-vis local equities.
BEMO was the sole mover among locally listed banks as its price dropped 4.2 percent to $2.875 on trade of 2,000 shares. Trade in Bank of Beirut “C” was its usual stable self with 6,000 shares exchanged on Monday, followed by 1,000 shares at each session from Tuesday to Friday. Volume on Byblos “C” rose markedly this week to 35,076, representing some 47percent of total weekly turnover. Demand and supply on Audi “C” were completely lacking this week except for Thursday when 500 shares were traded at an unchanged price of $20.75.
BLOM GDR rose to $23.25 from last week’s close of $22.5,before edging back to $23 to end the week 2.22 percent up, while Audi’s GDR rose 1.6 percent to $19.25.
Solidere’s turnover fell further this week, reaching a combined 9,045 for both share classes. The price of the “A” share remained steady at $6.75 for the third consecutive week as no real demand was registered on the stock. After remaining stable for more than two weeks, despite a constant excess of demand, the price of the “B’ share dropped to $6.875 from $7.The shares of the real estate company are expected to keep trading within the current range, as they await either a revival of the overall economy or progress on the peace front. A long wait is likely. The company’s GDR retreated to $5.525 after reaching $5.85 on Monday to end the week 0.9 percent up at $5.6.
Ciments Libanais was the only other stock traded, with 15,425 shares changing hands at an unchanged price of $0.438. – (Banque du Liban et d’Outre-Mer)